The Rest of the Nation
By Deborah W. Fisher
Corpus Christi Caller-Times
RICARDO, Texas -- The caliche entrance to Uranium Resources Inc. south of Kingsville is a dusty drive -- the wind sweeping across harvested sorghum fields, stirring up the sandy rock and leaving a film on the handful of cars and trucks parked near the offices.
A sign near the plant, "Alternative Energy for South Texas" with the familiar nuclear symbol, seems a little out of place in this part of the country, where many a man and woman have made it rich on oil and gas.
And, indeed, for the past five years, not much has happened here. But that is changing.
In April, Uranium Resources reactivated its Kingsville Dome uranium mine, and is now pulling $48,000 to $50,000 worth of the metal out of the ground daily.
The mine had been dormant since l990 when uranium prices slid to under $10 a pound and it became cheaper for the company to buy on the spot market to meet its contracts rather than produce it themselves.
South Texas mines reawakening
But with prices regaining strength and demand outpacing supply, Uranium Re sources has reawakened its production nea Kingsville and the Rosita site in Duval Count and is planning to expand in South Texas with two new operations in Duval and Brook counties.
Uranium Resources, based in Dallas, is the largest uranium producer in the United State and the only firm now mining in Texas, where it operates under its subsidiary URI Inc.
Although Uranium Resources leads U.S production with about 1.5 million pound expected this year, the United States itself produces only about 7 percent of the world supply. The world's largest uranium producer by far is Canada, with its huge deposits in Saskatchewan.
But a revival is going on in the uranium industry and, by early in the next century the U.S. Department of Energy estimates the U.S. uranium production will rise from its current 6 million pounds a year to about million pounds.
With plans for 4.5 million more pounds capacity itself in the next five years, Uranium Resources could easily lead the way. "I think there will be people coming in," said Paul Willmott, Uranium Resource's chief executive officer. "But we've tied up a lot of reserves when the prices were low. We've repositioned to maintain our place as No. l .The only current commercial use for uranium is in nuclear-powered reactors, of which there are 109 in the United States producing about 22 percent of the country's electricity.
Uranium has been mined in South Texas since the mid-1970s, when utility companies began to turn to nuclear power for cheaper energy after the oil embargo of 1973. Oil and gas companies, already equipped with exploration teams, were eager to diversify into the promising metal, 1 pound of which in its natural form is equivalent in energy to 30 barrels of oil (57,000 kilowatt hours). Leases were purchased in South Texas where uranium was found along the coastal fault system, next to oil and gas, and production began here as well as in other states -- Wyoming, New Mexico, Arizona, Colorado and Utah -- with large deposits.
By 1979, the year of the Three Mile Island nuclear plans accident, the spot price for uranium had reached highs in the $40 range, but prices soon started falling. Utilities canceled plans for reactors, permits were harder to get and interest rates soared. Many uranium miners got out of the business, and since then the large inventories created in the late 1970s and early 1980s have slowly been worked off.
The entrance of fresh supplies beginning in 1989 and the early 1990s from the former Soviet Republics filled the gap between demand and production for a while, and now the market expects regulated inflows of uranium from the blending down of U.S. and Russian nuclear warheads.
The turnaround in price began in 1995.
Combination of events
"You have a combination of production having come down, inventories being drawn down and no new supply entering the market," said Cindy Galvin, vice president of marketing for Uranium Exchange Co. of Danbury, Conn., which tracks uranium purchases. "There is definitely a gap betweer supply and demand. New production has to come on line at some point in order to satisfy demand."
To give an idea of how much uranium production has slowed in the past 15 years, consider that Westem world consumption in 1994 was 133 million pounds, with production at only 66 million pounds, according to various industry studies ana reports. In 1980, uranium numbers were flip-flopped, with production at 114.9 million pounds and consumption at 23 million pounds.
Many U.S. companies have begun preparations to increase uranium production with prices trending upward. Last week, the price vas $15.40, slightly lower than earlier in the year because of the normal purchasing lull in he third quarter, Galvin said.
Uranium Resources wants to add to its two sites in South Texas by 1998, said Harry An:hony, vice president for engineering for Uranium Resources in charge of the South Texas aperations. One is an 842-acre site in two leases in Duval County less than a mile from State Highway 359, called the Vasquez site, with estimated recoverable reserves of 2.4 million pounds. It is slated to replace the company's Rosita mine.
The second new mine would be the Alta Mesa site in south Brooks County, with a potential capacity of 14 million to 15 million pounds -- about 6.2 million of which can be economically recovered, Anthony said. Both sites are in the permitting process.
Has New Mexico reserves, too
Uranium Resources also owns property estimated to have more than 85 million pounds of uranium in northwestern New Mexico through a subsidiary, Hydro Resources Inc. It acquired the Church Rock and Crownpoint properties in the late 1980s and l990s when prices were depressed, Wlllmott said. Those properties also are in the permitting stage for mining, but when under production are estimated to provide uranium at an initial rate of 1 million pounds a year, and eventually 3 million pounds a year.
Wilmott estimates an eight to 10-year window to bring new production for the company on line.
The outlook for uranium prices has helped Uranium Resources stock (NASDAQ: URIX), which a year ago traded at about $7 and is currently trading at about $ 11 or $12 a share. Total revenue for the company was $17.9 million in 1994 and $21.8 million for 1995.
There are basically three types of uranium production in the United States, Bonnar said They are: conventional mining involving open pits or underground shafts; "in situ leach" or solution mining; and uranium re covered as a byproduct of phosphate production.
Uranium Resources uses "in situ" mining the least expensive method, because it avoids the high equipment and labor cost associated with open-pit mining as well as the environmental cost of disposing of radioactive mill tailings.
Solution mining leaves the ore body in place underground, extracting only the uranium through pumping of water in a continuous loop through the formation to dissolve the uranium, carrying the metal out of the ground to a processing plant where it can be captured through giant filters.
Not all ore deposits are conducive to solution mining. The ones in South Texas are because they are contained in porous bodies of sand saturated with ground water and sandwiched between layers of clay below the water table. The South Texas ores have fairly low concentrations of uranium as compared with ore in Canada, which is 20 to 30 times more concentrated, Anthony said.
Looking for more reserves
URI is producing about 3,000 pounds of uranium at the Kingsville Dome daily and is drilling new holes to find more deposits, Anthony said. The company has about nine rigs at the dome.
With about 70 employees, plus about 45 contractors on the project, the project has been an economic boon to the Kingsville area, said Dick Messbarger, executive director of the Greater Kingsville Economic Development Council. (At Rosita, URI has about 50 employees and about 10 contractors.)
"They've pumped more than $200,000 into the Ricardo Independent School District. Two hundred thousand plus in a small dis. trict is a big infusion of money," Messbarger said, referring to the small town south of Kingsville near URI's plant. "And the taxes for next year will be up significantly" because of increased uranium production.
In 1989 and 1990, when the company needed a permit to expand, it faced opposition from some residents who feared the mining would contaminate their water supply. The company got the permit after studies by the state's regulatory agencies, and is monitored by the Texas Natural Resources Conservation Commission to ensure the area's Goliad aquifer is not contaminated.
No contamination has been found and no complaints filed, according to the TNRCC.
Anthony, who has been in the industry since January 1976, said he's looking forward to the next few years and the company's expansion.
"I think we hit bottom a couple of years ago and things have risen in the last year and leveled out," Anthony said. "Maybe we'll get a little stability and see what the future holds down the road."